Navigating CEO Finances: Essential Considerations for Personal Wealth Management

As a CEO, you will have a highly specific skill set that enables you to navigate the ruthless world of business and excel within it.

You will also be intimately familiar with the risks presented by the nation’s current economic situation. As businesses and individuals continue to struggle with the effects of the inflation crisis, questions about finances and personal wealth management become more pertinent than ever. You may be a fresh-faced CEO new to the income you are receiving; how best should you manage this income, for your long-term security?

Diversifying Income

The first tip relates not to managing existing wealth, but rather managing the sources of said wealth. Helming a business is a stressful, skilful and appropriately well-remunerated role, but not one that is necessarily secure. Economic instability and poor business performance (irrespective of personal impacts or responsibilities) can harm take-home pay via reduced bonuses or commissions. 

Such financial hits might not seem particularly important, but if you have become accustomed to a certain lifestyle or standard of living – something we will address shortly – even the slightest knock could have serious knock-on effects for long-term financial stability. As such, diversifying income is just as important as diversifying investments. Taking on freelance work, in the form of paid speaking engagements or consulting roles, can be a strong way to shore up your annual income and shield against the buffeting winds of economic insecurity.

Shrewd Saving and Investment

As for how to manage the wealth you have accrued as a CEO, there are numerous avenues for you to explore. Sequestering large cash holdings in savings accounts can be an inefficient approach to growing your wealth passively. Standard savings accounts do not track well against inflation; this, coupled with the amount of interest you lose to Income Tax, can result in savings that shrink in value over time.

This is where the ISA as a financial product comes in handy, particularly for short-term and accessible savings. ISAs exempt interest or capital gains earned within them from taxation, allowing you to keep everything. The caveat is that you can only deposit up to £20,000 in total each year.

Alongside ISAs, much of your income should be invested instead of saved. Even a global index fund can outpace conventional savings accounts for growth, allowing you to grow your holdings quicker – and perhaps even eventually live on just the interest

Lifestyle Creep

Finally, in acknowledging the insecurity inherent to many financial situations – even those of a highly successful CEO – it is important to acknowledge the dangers of ‘lifestyle creep’. Having a high level of income can encourage a high standard of living, which is fine if it is an affordable one. Even high-value individuals should have something of a ruthless monthly budget if only to prevent the complete erosion of wealth to frivolous spending.

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